Tuesday, October 10, 2006

Israel's oil hopes rekindled

BINYAMINA, Israel, Oct. 10 (UPI) -- An Israeli drilling company has struck oil near the shores of the Dead Sea, but this latest discovery still can't compare with the reserves held by Israel's major oil-producing neighbors. To call the find, announced late last week by Ginko Oil Exploration, a blip on the world's energy radar would be generous.

Ginko representatives say there is enough oil to produce between 100 and 200 barrels of oil a day. The company's geologist, Eli Tannenbaum, told United Press International on Monday that it's impossible at this point to make a more precise estimate, and that it's also hard to tell now how long that oil will last.

"We hope it will continue for a long time," Tannenbaum said.

Saudi Arabia, meanwhile, produced 127 barrels of oil per second in 2005, according to BP's Statistical Review of World Energy 2006.

It's not even enough to be much help to Israel, which consumes about 220,000 barrels of oil per day, most of it imported from Azerbaijan and other former Soviet Union states.

That hasn't kept one of Israel's leading energy barons from snapping up a piece of the action, however. Avner Oil & Gas and Delek Drilling, two companies controlled by Delek Fuel Chairman Yitzhak Tshuva, Sunday night signed a $4.4 million deal with Ginko for 50 percent of the two exploration permits by the Dead Sea, according to a report by the Israeli business magazine TheMarker.

Tshuva also holds a large interest in Israel's only natural gas supplier, Yam Tethys.

Tannenbaum said that extracting even a small amount of oil would be profitable for the company, since Ginko is returning to the site after 10 years -- then, with oil at $15 a barrel, the quantity wasn't profitable. But now that the price has jumped fourfold, there is profit to be made.

The two drilling sites, Zerach and Zurim, extend over a 50 square kilometer area. However, Tannenbaum said that the company expects to find much, much more than the 100 to 200 barrels a day they have in hand at those sites.

"We're expecting a lot more ... we have a very big estimate of the oil (to be found) here," Tannenbaum said. In all, this estimate amounts to 5 million barrels.

Tannenbaum said the company holds another 10 sites in the Dead Sea region -- all within the Green Line of Israel proper, and not situated within Palestinian Authority territory.

Since 1947, 470 wells have been drilled around Israel, but none of them has yielded a significant oil find, though drilling around the Dead Sea has yielded some oil in the past.

Earlier this year, an American company called Zion Oil & Gas announced it had found "nine productive zones" on its permit in central Israel, near the city of Hadera. However, Zion suspended drilling for lack of funds before extracting any hydrocarbons, and spent most of 2006 working on an initial public stock offering in the United States.

Zion's founder John Brown, like many of the wildcatters who searched for oil in the Holy Land, says he believes there is oil to be found because certain passages in the Bible hint at "treasures of the deep." American evangelist James R. Spillman, who died in 2002, was also a strong proponent of the belief of oil in Israel, and wrote a book called "The Treasures of the Deep" outlining the Bible verses that supported his conviction.

Though a big oil find has proved elusive in Israel, natural gas is more available: Tshuva's Yam Tethys shares the rights (with American company Noble Energy) to a field off the coast of the Ashdod-Ashkelon area in the Mediterranean Sea, and another field was discovered of the coast of the Gaza Strip.

Israel gave the Palestinian Authority control of the Gaza gas field during the Oslo Accords talks in 1993, and the PA now shares control of the field with the British company BG Group.